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Cook County competes for Medicaid patients
Expanding health care coverage isn't making Dr. Ramanathan Raju's job any easier.

Monday, August 26, 2013
Crain's Chicago Business
by Kristen Schorsch

The CEO of the Cook County Health and Hospitals System, one of the nation's largest providers of care for uninsured patients, is facing new competition from institutions ranging from Presence Health to University of Chicago Medicine.

Low-income patients that some hospitals historically have shunned will become somewhat more attractive next year. Under the massive federal revamp of health care, an estimated 1.2 million Chicago-area residents are expected to gain some form of coverage on Jan. 1. About 36 percent will be eligible for Medicaid, while the rest could buy policies on a new statewide health insurance exchange.

The Medicaid reimbursement rates won't be comparable with the fees paid by commercial insurance. But the expansion is expected to reduce the cost of treating uninsured patients, which hurts every hospital's bottom line.

Winning over those patients is a key to Dr. Raju's ambitious budget proposal for fiscal 2014. Nearly half of next year's projected revenue of $950.7 million is expected to come from a new Medicaid program he launched in late 2012. Yet Cook County Health still struggles with a reputation for crowded facilities and long waits, which may prompt some potential patients to go elsewhere.

“They're going to be competing with the big boys,” says Barbara Otto, CEO of Health and Disability Advocates, a Chicago nonprofit.

The new health care law calls for expanding Medicaid to include adults with annual incomes that are up to one-third higher than the poverty level, which is $11,490 a year for an individual.

Dr. Raju has a jump on the competition, signing up the new Medicaid patients under a pilot program approved by the Obama administration. Launched late last year, CountyCare treats patients for a set amount of nearly $630 per recipient per month split evenly with the federal government, a potentially more lucrative arrangement than the traditional fee-for- service format. Federal officials would pick up the entire monthly tab next year if the program is extended.

CountyCare is expected to net the cash-strapped public health system at least $28 million during the current fiscal year, which ends Nov. 30.

The program, which intends to reverse a decline in Medicaid revenue for the county, is a success, Dr. Raju says. Yet CountyCare is set to sign up only about half of the 115,000 patients he originally predicted. As result, Cook County Health is on track to fall $40 million short of the $712 million revenue goal set for fiscal 2013.

Revenue covers only part of the cost of operating the system. Taxpayers provide a subsidy, which fell to about $363 million in fiscal 2012, the most recent figure available and the smallest amount since 2010.

Dr. Raju blames the Illinois Department of Human Services for taking too long to review applications to CountyCare. Over the past year, the department has increased manpower and now has “adequate staff to address pending applications,” a spokeswoman says.

Dr. Raju (at right, at a Crain's hospital CEO event) predicts that CountyCare's 2014 enrollment will reach at least 115,000, boosting revenue from the program to $468.2 million. “I think we are ahead of the game,” he says.

ELIGIBLE

Better-financed hospitals also see the Medicaid expansion as an opportunity to reduce the cost of treating uninsured patients, which in turn drives up costs for patients with insurance.

Presence Health, which has 12 hospitals statewide, including Chicago safety nets Sts. Mary & Elizabeth Medical Center and Our Lady of the Resurrection Medical Center, is helping patients determine their eligibility for some form of coverage, CEO Sandra Bruce says. With annual revenue of $2.74 billion, Presence plans to expand its network of outpatient centers 45 percent to nearly 90 locations from 60 currently, she says.

Hyde Park's University of Chicago Medicine, better known for cutting-edge research, is considering expanding its primary care through neighborhood clinics, says Dr. Chad Whelan, associate chief medical officer for clinical innovation.

The Near West Side's University of Illinois Hospital & Health Sciences System, which is near Cook County's John H. Stroger Jr. Hospital, is profiling frequent emergency room patients to better manage their care.

“High-quality care, good outcomes and a degree of loyalty” will help keep and attract new patients, says Dr. Bryan Becker, associate vice president for health affairs for hospital operations.



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